Factor of face amid battle of the baht

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Who won the battle of the baht? Was it the Bank of Thailand, which forced the evil hedge funds of the world to end their attack on the currency by pushing interest rates more than 1,000 per cent? Or could George Soros claim a pyrrhic victory after forcing the baht down more than 20 per cent? The Soros camp was quick to concede defeat following the baht's devaluation - a bit too quick perhaps.

Fund managers, after all, are not usually in the habit of advertising their losses.

Many market players suspect Mr Soros cut a deal with the Bank of Thailand. The statement of defeat from Mr Soros' chief investment officer within hours of the devaluation gave the Bank of Thailand tremendous face.

In return, the Soros funds may have been bought out of their painfully expensive short positions by the central bank, perhaps in return for a promise to buy equities. Money the funds lost on the currency could be made back in the stock market.

Arguing against this theory are those who believe the central bank is far too disorganised to pull off such a plan. Remember, a new finance minister was appointed just days before the devaluation.

The baht battle is far from over, despite the devaluation.

Some funds still hold forward contracts set to expire in mid-August. Watch the stock and currency markets next month for a bout of turbulence.